Redevelopment Agencies File Lawsuit Challenging Unconstitutional $2.05 Billion State Raid of Local Redevelopment Funds
* Reuters is not responsible for the content in this press release.
Redevelopment Agencies File Lawsuit Challenging Unconstitutional $2.05 Billion State Raid of Local Redevelopment Funds SACRAMENTO, Calif., Oct. 20 /PRNewswire/ -- The California Redevelopment Association (CRA) announced today that it filed a lawsuit in Sacramento Superior Court to stop ABX4-26, a state budget trailer bill passed in July 2009 as part of the 2009/10 state budget. ABX4-26 authorizes a $2.05 billion raid of local redevelopment funds to use for state purposes. The lawsuit challenges the constitutionality of ABX4-26 and seeks to prevent the State from taking redevelopment funds for non-redevelopment purposes. This is the second lawsuit filed by CRA. In April 2008, the Sacramento Superior Court ruled in favor of CRA and invalidated 2008 budget language that would have shifted $350 million in redevelopment funds to the State. On September 28, the State dropped its appeal in the first case, making the April decision final and binding. "We believe the second budget raid by lawmakers is just as unconstitutional as the first," said CRA Executive Director John Shirey. "Lawmakers ignored the State Constitution and attempted to write state budget legislation around it. That's simply irresponsible policy-making, and it illustrates why many have concluded state government is broken and needs fixing." Shirey continued, "Though we fully expect to receive a favorable decision from the court a second time, local redevelopment agencies still must be prudent and set aside funding in case the court does not rule by the time the payment is due in May 2010. What that means is that many agencies will, in effect, cease to operate because they will have no funds available for new investments in their communities. Having to set aside this huge amount of funding robs California of one of its most productive job creating engines, and at a time when unemployment is high and still rising." Joining CRA as named plaintiffs are two redevelopment agencies: the Union City Redevelopment Agency in Alameda County and the Fountain Valley Agency for Community Development in Orange County. The lawsuit alleges ABX4-26 is unconstitutional for two main reasons: Article XVI, Section 16 of the California Constitution, approved by voters in 1952, states that redevelopment tax increment funds can only be used for specified redevelopment activities, specifically "to finance or refinance ... the redevelopment project." Taking redevelopment funds to balance the State's budget - the unquestioned purpose of ABX4-26 - does not qualify as a constitutionally permitted use of redevelopment funds and is therefore unconstitutional. Second, raiding $2.05 billion in redevelopment funds constitutes an unconstitutional impairment of contracts. Under Article XVI, Section 16 of the State Constitution, redevelopment agencies irrevocably pledge redevelopment (tax increment) revenues to pay back bonds and other obligations that raise the capital to fund redevelopment projects. By raiding funds that are pledged to pay back bonds and other creditors, ABX4-26 impairs the contractual pledge of revenues on which redevelopment financing is based. In Union City, the State raid threatens to delay the 100-acre BART Station District redevelopment project. The project, a collaboration between the Union City Redevelopment Agency, other local transit agencies and the state and federal governments, includes remodeling the BART station to create a two-sided station with additional parking; nearby new housing; new offices; and retail space. This transit-oriented development has been in the works for 10 years. To date, the Union City Redevelopment Agency has invested more than $60 million in the project, including clean up of hazardous materials and construction of public infrastructure. Project delay jeopardizes state Prop. 1C housing funds needed to construct the housing. The Union City Redevelopment Agency has no unobligated funds to pay the $7.7 million required to be paid under ABX4-26. "It's unthinkable that all our hard work could unravel because of the irresponsibility of the State Legislature and the Governor," said Mark Evanoff, Union City Redevelopment Agency Manager. "This project will bring new life, new jobs, and economic opportunity to Union City, and it is exactly the type of development needed in the Bay Area to reduce traffic and carbon emissions by centering jobs and homes near public transit. Unfortunately, it's all at risk because State lawmakers won't follow the Constitution." The CRA lawsuit also identifies additional constitutional violations, including two illustrated by the Fountain Valley Agency for Community Development's situation, which impacts education funding and demonstrates why attempts to ignore the law are ill-advised. In Fountain Valley, ABX4-26's requirement that money transferred to schools from redevelopment agencies be spent on pupils residing in the redevelopment project area, or in housing assisted by the redevelopment agency, will result in expenditures of approximately $3.3 million on only 64 students attending the Garden Grove School District. That's $52,518 per pupil. Average per-pupil spending in California is about $8,500. At the same time, State assistance to the Garden Grove school district will be reduced by $3.3 million, resulting in a significant reduction in funds available to spend on the vast majority of students not residing in the redevelopment project area or in housing assisted by the redevelopment agency. This is in direct violation of the 1970s U.S. Supreme Court decision Serrano v. Priest which prohibits spending disparities based on geography, and a violation of Proposition 98, which obligates the State to provide funding for school districts, not funding for a special, limited group of students. "This is exactly what happens when lawmakers don't think things through," said Raymond Kromer, Fountain Valley Agency for Community Development Executive Director, and Fountain Valley City Manager. "You wind up with unintended consequences that clearly aren't in anyone's best interests, especially not the students'." SOURCE California Redevelopment Association Kathy Fairbanks, +1-916-443-0872, email@example.com, for California Redevelopment Association
- Search planes scour sea for missing Malaysian jetliner |
- Timeline: Malaysia Airlines flight to Beijing missing in Asia
- Missing Malaysian jet may have disintegrated in mid-air: source |
- Exclusive: Malaysia plane probe narrows on mid-air disintegration - source
- Mexico kills drug kingpin reported dead years ago: official